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October 18, 2017

How is Coal India Addressing the Increased Demand for Coal from the Power Sector? http://thetruepicture.in/how-is-coal-india-addressing-the-increased-demand-for-coal-from-the-power-sector/ … via thetruepicture

Steps by Coal India have resulted in a substantial increase in supply to the power sector over the last two months

In August, coal supplies were 14.4% greater than in August 2016. Similarly, the supply in September grew by 21%. The growth could be even higher for October (29% till October 11)

In September 2017, 193 rakes were supplied daily to the power sector, which has further increased to 206 in October

Overall, till date, the coal off-take of Coal India has grown by 8.3% this fiscal year

In this period, there has also been a substantial growth in coal production. September saw a 10% growth in production as compared to September 2017By Policy Analyst

Reports claiming a shortfall in coal supply based on low stock with thermal power plants (TPPs) seem to be taking a narrow perspective of the prevailing situation. Data on coal production and thermal power generation from the last few months provide an accurate picture of the scenario.Every year, the supply of coal is relatively lower during the Monsoon due to the weather conditions. This year, the annual occurrence coincided with a decline in power generation from various sources. Production of electricity through windpower and hydro generation was reduced by 1,000 MW each in August and September. There was a 12% decline in hydro generation in August 2017 as compared to August 2016. Nuclear Power generation has also fallen by 2,000 MW during August and September. Imported power from Bhutan was also lowerin this period. The simultaneous occurrence of all these developments resulted in an additional burden on thermal power. The increase in thermal power generation subsequently led to a spurt in coal demand by 20 MT.

How did Coal India fare in addressing this increased demand? Since April 2016, TPPs started reducing their coal stock. This led to a concomitant increase in the pithead stock of Coal India. On April 1, 2017, the coal stock of TPPs was 28 MT; 11 MT less than the stock held a year back. In the same period, there was a substantial rise in pithead stock kept by Coal India — from 38 MT to 68 MT. Incidentally, this was an all-time high level of pithead stock. This reaffirms the broad trends in coal production. In the last three years, there has been a huge increase in aggregate production by Coal India. Thus, it would be misleading to claim a shortage of coal by merely looking at the number of coal plants with low stock.

Concentrated steps by Coal India have resulted in a substantial increase in supply to the power sector over the last two months. In August, coal supplies were 14.4% greater than in August 2016. Similarly, the supply in September grew by 21%. The growth could be even higher for October (29% until October 11). In September 2017, 193 rakes were supplied daily to the power sector, which has further increased to 206 in October. To ensure availability of rakes for long-distance supply, plants within 60 kilometres have been asked to make greater use of roadways for coal transportation.

Overall, until now, the coal offtake of Coal India has grown by 8.3% this fiscal year. This increase in supply for TPPs does not seem to be coming from a massive reduction in pithead stock or transfer from other sectors. In this period, there has also been a substantial growth in coal production. For instance, September saw a 10% growth in production as compared to September 2017.

In the data, it is evident that availability of surplus coal with Coal India has allowed the government to tide over the increased demand.